Following Tuesday’s price cut, Webvan 2.0 is now even cheaper!
But it’s still not good value, according Nick Bubb, the veteran retail analyst at Arden Partners:
Investors are looking for genuine growth stocks, but, even after the inevitable slashing of the Ocado IPO price from 200-275p to 180p, it is astonishing how high a price is being paid for Ocado. Including the £200m of new money, the market cap is £937m at 180p and the EV/EBITDA would be around 41x, based on our £20m EBITDA forecast to November 2010, falling to around 28x, based on our £30m EBITDA forecast to November 2011.
In fact it’s not even close.
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It looks like Goldman Sachs et al really had to pass round the tin to get Webvan 2.0 on the road to its public listing.
A quick read of the supplementary prospectus shows that two existing shareholders – Tetral, Jorn Rausing’s investment company and hedge fund manager Nick Roditi – put their hands in their pocket for £4m and £10.8 shares respectively, while chairman Michael Grade and finance director Andrew Bracey bought £100,000 shares each. And on top of that CEO Tim Steiner decided not to sell any shares because (and get this) the new price range did not reflect the true value of the company. Yeah right.
Clearly there wasn’t much institutional demand out there for Webvan 2.0 and it makes one seriously wonder who about the overall quality of the book.
Related links:
Offer price announcement – Ocado
Stabilisation notice - Ocado
Supplementary prospectus – Ocado